1. Ignoring
Valuation: Price
is not the same as value. Price is what you pay while value is what you get.
Even if you are buying a great investment, you must buy at a pre-determined
fair value. Most times prices are driven by emotions of market participants
rather than fundamentals of the investment assets such as stocks. There are low-priced investments that trade above their
intrinsic values.Investors beware!
2. Falling
in love with products: Great
brands are not synonymous with profitability. Some popular products are bedevilled
by low profit margins and volatile earnings. It is your responsibility to do
your home-work by digging deep to uncover the inherent risks associated with
your proposed investment.
3. Panicking
When the Market is Down: Depressed
market creates the best buying opportunity. A market correction after a market
bubble, investment sentiments and recession could be responsible for falling
prices.
4. Timing
the market: Investing
is committing your money in the hope of a future return.Nobody has the crystal
ball; thus it is impossible to predict the future accurately. The capital
market cannot be timed. The best time to invest is always if you wish to build
wealth because the bulk of the return comes from few days in the year.You may
miss opportunities if you fail to monitor the market constantly and invest
accordingly.
